Between the two of them, First Solar and Plug Power cover the two most promising fields of renewable energy. While First Solar operates in the solar energy sector, Plug Power operates in hydrogen storage, on-site hydrogen electricity generation, and some other hydrogen-powered applications.
But which stock, FSLR or PLUG, is a riskier investment going forward?
First Solar is the largest solar equipment manufacturer in the US. The company has a global manufacturing nameplate capacity of 6.7 GW. The company operates 3 manufacturing plants globally. The company sold 6.1 GW of equipment in 2019.
Plug Power is a developer of hydrogen fuel storage and electricity generation systems. However, they also develop storage systems and hydrogen engines for commercial vehicles like forklifts, cargo vehicles, drones, etc. The company went public in the late ’90s and was a stock market darling during the dot-com bubble. The stock was moving sideways from then until Amazon inked a deal with a company for its fulfillment centers that included stock-warrants. The company has a market cap of $9.55 billion and is up 600+% this year after outperforming projections for the previous two quarters.
First Solar is far more focused on commercial and utility-scale installments than consumer or B2B sales. The company offers all-in-one installation, maintenance, and project financing solution to large-scale clients and this segment makes up more than half of its 2019 revenue. It is also worth noting that this segment has bigger margins compared to just module sales. The company also has a technological advantage as their Cadmium Telluride(Cd-Te) semiconductor film technology is the most efficient in the world with 22.1% cell efficiency and 18.2% module efficiency.
Plug Power manufacturers complete hydrogen power systems for its customers, who are all commercial ones. The company has a number of verticals including on-site hydrogen storage and electricity and hydrogen powertrains for a variety of commercial applications. The company has recently revealed its roadmap for the next 4 years, at the end of which it aims to have $1 billion in revenue and $200 million in EBITDA.
The company is currently the biggest buyer of liquid hydrogen in the world. PlugPower has plans to generate $200 million in revenue from on-road applications. Their ProGen hydrogen system is based on a modular philosophy and can power electric motors from sub-1k Wh-250kWh, making it applicable to all classes of vehicles, from consumer to freight. The company plans to enter the hydrogen production market and target average daily production of 100 tons by 2024.
First Solar reported its Q3’20 numbers and reported a 70% YoY growth in net sales. The company reported net revenues of $928 million, operating income of $207 million net income of $155 million. Net income is up nearly 5x from Q2 and Q3’19. The company has a market cap of $8.63 billion and a P/E of 39.02.
For Q3, PlugPower outperformed all expectations and its own guidance by reporting revenues of $125 million, up 106% YoY, and 74% QoQ. The company has raised its 2020 guidance from $310 million and $330 million. The company deployed a record 4100 fuel cell systems and 13 hydrogen refueling systems. Adjusted EBITDA for the quarter was $24 million, which is very promising as it is already well above the company’s target of 20% operating margin by 2024.
First Solar has an excellent history of growing its business and profitability, and also operates in the rapidly growing solar sector. However, PlugPower is operating in a far higher potential sector and the company has invested in some very promising verticals. While First Solar seems like a great investment, PlugPower is definitely the riskier but higher upside choice of the two.